Grumbling about the government and the “fiscal cliff” (7 letters)

For weeks the news has been full of dire warnings about the “fiscal cliff.” Actually, it is more like a “continental divide.” The result of going over it is a gradual slope, not a freefall over a cliff. Besides, Congress can pass retroactive legislation any time in the next several weeks to undo the damage.

A second thought: Many are blaming Congress for the impasse. Letter-writer Kris McCusker (“Stumbling to the edge of the ‘?scal cli?,’?” Dec. 31 letters to the editor) explicitly blames Congress, and several letter-writers suggest electing different representatives, or even overthrowing the government. Actually, congressional leaders have reached several tentative deals, only to have President Obama announce that it is unacceptable and threaten to veto the deal. A good part of the blame lies with him.

Richard W. Postma, Littleton

This letter was published in the Jan. 3 edition.

The common theme that the “fiscal cliff” should have been avoided by reasonable compromise in Congress is naive. With a $1.1 trillion annual deficit and a $16 trillion debt, we are headed down the road to national bankruptcy. We have a major spending problem. By now, we all should know that Congress always spends everything it can get its hands on, and then some, nurturing support constituencies.

In spite of the feel-good sound of the word “compromise,” why does it make any sense to increase tax revenues so Congress will have still more to fritter away unless, of course, we really, down deep, believe in socialism’s wealth redistribution mantra?

Robert Seklemian, Denver

This letter was published in the Jan. 3 edition.

I spend many hours pondering this obsession with continued tax cuts, which in turn lower revenue and help drive up Americas debt and deficits. Congress talks about the great need to reduce the debt and deficits, but when it comes to raising any new revenue, both parties are out here touting tax cuts and which party can cut then the most.

This might be OK if we had high tax rates, but we have the lowest tax rates in some 60 years. Now we hear Congress talking about not paying the bills they have accrued and approved. Are any of these people in Congress really serious about fixing the American economy?

Steven Nein, Ovid

This letter was published in the Jan. 3 edition.

President Obama’s comments about not being able to pull off a “grand bargain” seem hypocritical given that a staged approach to health care reform would have produced a much better end product and would probably have prevented some of the inter-party animosity that has deadlocked Congress the past two years.

Identifying the major issues, prioritizing work on the issues, using models that are currently working as the bases for proposed solutions, and implementing and monitoring those solutions seem to be the obvious way to tackle very large-scale problems. Our current crop of government officials don’t seem to be able to focus on anything but re-election, so we end up with a management-by-crisis style of leadership that produces no long-term solutions.

Rich Jarboe, Arvada

This letter was published in the Jan. 3 edition.

I found this section of the transcript of President Obama’s speech on the fiscal cliff to be sad and offensive:

Keep in mind that just last month Republicans in Congress said they would never agree to raise tax rates on the wealthiest Americans. Obviously, the agreement that’s currently discussed would raise those rates, and raise them permanently.

(APPLAUSE).

Why has the president of the United States created an atmosphere that is so divisive that one group of Americans cheers loudly when he announces that another group has to pay more taxes? I was prepared to support a “balanced approach” to reducing the deficit, a plan that would raise my taxes and reduce government spending. But why should I support Obama’s plan when no spending cuts are contemplated and he demonizes me even when I agree to pay more taxes?

If medals of honor were awarded for acts of political heroism, Sen. Michael Bennet would deserve one. Voting for or against the “fiscal cliff” bill was a choice between the lesser of two evils. Rather than following the easy, safe path of party politics, Bennet followed the dictates of his own conscience, voting against the bill because he thought that would be best for the country.
Well, done, Sen. Bennet. It is refreshing that there are some in Washington who can still place the good of country above partisan politics.

John Dellinger, Lakewood

This letter was published in the Jan. 3 edition.

Regardless of your political affiliation, you are quite likely disgusted with the current Congress. Perhaps you feel powerless to do much about it, that a letter, e-mail or phone call to your representative or senators will be met with a polite, but useless response (often one that does not even address the topic you raised). Regrettably, only one sensible solution seems to exist: congressional term limits. If our president is limited to two terms, why not our legislators?

Ross Meyer, Monument

This letter was published online only.

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Richard’s letter is perfect proof of media bias. Can someone who falsely believes there is no media bias show me where a major news network except for Fox, has taken President Obama to task for trying to work with Congress. Or did anyone take him to task for again wanting to have it his way? well?

peterpi

Only Fox News Is Unbiased
You gotta love it.
Obama’s been trying to woprk with Republicans since day one.
But all they wanted to do was make him a one-term president. They failed, so now they’re grumpy and they’ll throw roadblock after roadblock in his attempts to do anything.
May God grant long life and pristine health to the current Supreme Court justices. Please. Because if any of them need to be replaced on Obama’s watch, the Republicans will filibuster the nominee — any nominee — until January 20, 2018.

thor

No. Only Fox news is the only source thatmight cover the issue I talked about. But clearly you just want to take the argument to me, but you have no interest in proving me wrong. Come back with something, or don’t come back. p.s. I didn’t bother to even read the rest of your reply because I knew you wouldn’t even try to prove me wrong.

thor

Robert, excellent point. But why didn’t you just say” We want socialism wealth redistribution.” After all, fair is fair. My question is, do we want to run the government like a bunch of kids at recess: “Hey, that’s not fair!”

thor

Steve, where did you come by the idea that raising tax rates brings in more revenue?

Tbone

History, perhaps? LIke the nearly dozen times Reagan raised taxes? Or when Clinton did it?

thor

Neither Reagan nor Clinton raised tax rates, Congress did. Presidents can neither raise nor lower tax rates. And the rates raised during the Reagan administration were not rates that he asked for. Luckily, he asked for the marginal rate to be lowered and Congress did, which lead to a boom in our economy.

vance meyer

Ross is right…Term Limits are needed.

Robtf777

Both Congress and the President did what Congress and the President do best: Played Poker and Chicken, Compromised, Caved In, Went Back On Their Rhetoric, Thumbed Their Noses At Their Own Lines In The Sand………and Claimed Victory……while doing nothing to actually solve our nation’s financial and economic problems.

Trillion Dollar Deficits will continue. The National Debt will continue to rise. The US will be forced to borrow Trillions upon Trillions upon Trillions of More Money……from Overseas…..from Russia,,,,,from China……from whoever has that kind of money and is willing to “throw good money into a very, very bad Money Pit called the US National Debt.”

President Obama and the Democrats are relishing their VICTORY over the Republicans…….but history will decide whether or not the Annual Deficits and Skyrocketing National Debt under President Obama and the Democrats is anything akin to a “victory”……or selfish self-pandering that lead to the Great Financial Collapse of the United States.

President Obama and today’s Democrats will NOT be writing our future history books.

It will be OUR CHILDREN……OUR GRANDCHILDREN……who will look back at the years of 2009 – 2017…….much like we do at the Great Depression……who will be writing the history about that Awful Massive Debt ($25 Trillion? $30 Trillion? More????)……that “we” (they) stuck our future generations with.

No one should expect them to be……kind.

In fact, think of the greatest stock-fraud and ponzi-swindlers of the past decade or so……and our children and our grandchildren may be adding……this president……and this Democrat Congress……to that list with those same feelings.

irisman

I owe Robtf an apology from a previous post, where he mentioned Ford Mustangs with 400 Hp engines and I said there is no such thing. Turns out that the Boss 302 boasts 444 Hp. it’s base price is $42000.

primafacie

I’ll take a blue one. Does it come with a badass stereo and mag wheels?

peterpi

It’s a magical vehicle. Every 5 miles, it turns into a gas station.

primafacie

Mr. Dellinger, voting against 92 percent of the senate — meaning the bill was passing handily whether he voted for it or not — is hardly a heroic stand. Had he aggressively worked to defeat it, bucking party leadership and the White House while proposing actual cuts in runaway spending, would have been an act of political courage.

peterpi

Amazing. I agree with you, LOL

primafacie

Ha, there’s hope for us yet…

Clastics

Sten, with this “fiscal cliff” tax increase we have now surpassed the marginal tax rate of clinton (both income and capital gains), the highest tax rate in 25 years. Federal and state/local tax rates are now north of 50% (collectively) for many states in the US (especially those where the “high earners” are concentrated). I am not sure how competivive, moral, or incentive generating further increases in the top marginal tax rate would be.
Now for the other taxes on the “lower” and “middle” classes, yes these are at historic lows. However, a) I don’t really think that these were the sort of people you were speaking of, and b) I don’t see the inherent efficiency in taxing the lower/middle classes to have money that the fed can then funnel to back to the lower and middle classes (with the distortion from decreased benefit from work, increased unearned benefit).
As an aside, the US is at the top of OECD countries with respect to tax take from the wealthy (both as % of tax take and %GDP). This may indicate that the potential isn’t there for “increasing taxes” if the aim is (long term) to maximize government reciepts.

reinhold23

Citation for your OECD claim, please. All reports I’ve seen indicate the contrary.

Clastics

One must also consider state and local taxes to determine total tax take. Total tax take for the US in 2010 is was 28% of GDP.

In addition, “According to the OECD, a think tank, the top 10% of earners contribute about a third of total tax revenues—28% in France, 31% in Germany and 42% in Italy. Rich Britons pay about 39% of total taxes while America’s wealthiest households contribute a larger share to government than in any other OECD country, at 45%.” (not sure how wealthy was defined, would be consistent though)

Combining the two statements leads to USA taxation is at 29% of gdp (prior to the 2013 increase) and that USA tax revenue from the wealthy is at 45% of total tax take, one could assert that US tax take from the wealthy is at ~13.1% of GDP which contrasts with 12.6% for France (45% of gdp taxation * 28% wealthy contribution) and 12.7% for Germany (41%*31%). With the futher 15% increase in income tax rate and 33-60% increase in capital gains tax rate (not sure if the 20% already includes the medicare surcharge), the relative contribution from the US will only increase in both relation to GDP and (most likely) total tax take (if taxes don’t affect their behavior). It also completely ignores the fact that higher incentive for marginal income in the US will increase GDP (the denominator of tax rev as a % of GDP) than an alternative system with lower rates (the magnitude of this change can be agued).

Based upon the relation above, it can be reasoned that in the USA, the rich are paying their “fair share” as defined by what they pay in other countries of equivalent developed status. The difference in tax take is (more than) entirely born by their middle and lower classes in the form of VATs and indirect taxes.

One could argue that the low tax rate and accompanying high take for the rich in the USA is a function of higher incomes and wealth. This is correct; however, France and Germany can be considered equivalent nations on a developed basis. Any differences in income or wealth creation are in the long term likely a function of economic policies in the respective countries. Having a punitive tax regime diminishes wealth creation and higher incomes in the long term. This may be considered “noble” for purposes of “equality,” but it does little (nothing) to increase the contribution from the wealthy. In effect, if the purpose is to maximize net contribution from the wealthy (as a percent of GDP), then our tax regime would appear superior. This does not even count the negative implications towards growth of having a diminished reward structure for production or investment (income and wealth distribution).

Clastics

Regarding the source, I salvaged the quote from a TE article a while back but did not track down the original OECD report. The Economist has historically (in my experience) done a good job of factually presenting data (their analysis being of much poorer quality).

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